In a regulatory disclosure, Dr. Reddy’s Laboratories Ltd, a pharmaceutical company, acknowledged receiving a tax demand notice from the Additional Commissioner of Central Tax, Hyderabad GST Commissionerate.
The notice entails a total penalty, inclusive of interest, amounting to Rs 74.22 crore. This demand stems from the company’s recent erroneous utilization of input tax credit.
The demand order issued by the GST authority cites the company’s failure to reverse the wrongly availed input tax credit under the provisions of the CGST/SGST/IGST Act, 2017. The initial tax sum, standing at Rs 67,47,37,495, is subject to additional interest or penalties totaling Rs 6,74,73,752, thereby elevating the company’s overall liability to over Rs 74 crore.
Despite the imposition, Dr. Reddy’s denies the liability and intends to contest the notice by initiating an appeal. “The company is poised to lodge an appeal with the appellate authority,” stated Dr. Reddy’s.
Furthermore, it emphasized that the GST demand notification does not affect the company’s routine operations or financial status.
The Punjab and Haryana High Court issued notice in the matter regarding the extension of time limit to pass demand order under Section 73(10) for wrongful availment of input tax credit (ITC) under the Central Goods and Service Tax Act, 2017 (CGST Act).
What Constitutes Wrong Availment of Input Tax Credit Under GST?
Wrong availing of ITC occurs when a business claims or utilizes ITC in contravention of GST regulations.
Read More: No Details on wrongful Availment of ITC in SCN: Delhi HC modifies Retrospective Cancellation of GST Registration
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